I live in Baldwin Park, so I pay a lot of attention to the neighborhood real estate market. The inventory of homes available for sale is down to 68, and unlike Orlando in general, "normal" sales make up a significant majority of the homes available. Currently, only four homes for sale are bank owned and 19 are short sales. The 45 remaining make up nearly 2/3 of the inventory compared with just about 52% in Orlando overall. With a smaller impact from distressed properties prices in Baldwin Park have remained very stable compared to last year as well. Homes currently on the market have a median list price of around $388,000.
Pending sales have a median list price of $312,500 and reflect more impact from the nearly 2/3 distressed properties under contract. While this is a substantial percentage it is still far lower than the percentage of distressed properties under contract overall. Short Sales and REO properties make up about 83% of all the pending contracts in the Orlando real estate market. Short sales dominate this category with 38 pendings, while only three pending properties are bank owned in Baldwin Park. There are considerable pricing differences between the bank owned, short sales and "normal" sales. Much of that appears to be driven by the type of properties. Since Baldwin Park is a planned community there are condos, and townhomes in addition to several styles of single family homes. The multi-family types of homes appear to have been more prevalent in the distressed category.
Closed sales have been very strong this year with 100 transactions of all types completed so far. The median price of the sales posted this year is $340,000 which is just about 2% less than 2009 sales prices. In Orlando overall the drop was closer to 8%. Of the 100 closed so far 17 have been bank owned and 26 were short sales. That leaves 57% "normal" sales compared to about 37% "normal" sales in the greater Orlando market. The "normal" sales median price was $439,000 again reflecting the impact of the multi-family homes, especially condos, on the distressed sales. If there were more readily available financing for condos, you could look to see our numbers climb significantly in Baldwin Park and Orlando.
Check out 3756 Lower Park Rd., but do it quickly. I just put it back on the market Monday afternoon, and I am expecting at least a couple of offers on it today (Wednesday).
David Welch Real Estate Optimist, Orlando Real EstateGoogle's Top Realtors
Here are the latest numbers for June. Inventory has been slowly rising as new contracts have slowed down a little bit. Closed sales for June will still be very strong as 1,934 have closed so far with the last three days of the month still to come. My last closing of the month is tomorrow morning, and will cap off the best month I have had in quite some time. Altogether, I closed five transactions this month totaling almost $800,000 in closed business. Two of the sales were my listings and leaving three buyer sales. Three of the sales were "normal" sales, one was an REO and one was a short sale. These numbers are not even close to the market overall . Bank owned and short sales continue to make up a large percentage of the closed sales. With 779 and 483 bank owned and short sales closed so far, distressed properties account for 65.3% of the closed sales.
Active listings have been slowly rising over the last month with 16,438 homes currently available for sale. Of that number 2,286 or 13.9% are bank owed, 5,737 or 34.9% are short sales, leaving 8,415 "normal" sales or 51.2% of the total. While the active inventory has risen slightly, pending sales have dropped. There are now just under 10,000 with 9,995 currently under contract. This is the category that reflects the biggest impact from distressed properties. 84.3% of all pending sales are either bank owned or short sales. There are 2,097 bank owned and 6,327 short sales under contract with only 1,571 "normal" sales pending. One trend I am starting to see emerge is a possible shift from short sale to bank owned. The total number of short sales either active or pending is down several hundred, while the number of active and pending REO properties is up. Another possible trend is a slight drop in cash sales. In the first five months of this year just over 50% of the sales have been cash, but this month only 47% have been cash. It could be a trend or just the impact of tax credit as "home" buyers edged out investors slightly.
David Welch Real Estate Optimist, Orlando Real EstateOne of Google's Top Realtors
I just received this award for being one of Google's Top Realtors here in Orlando. This was given to the top ten Realtors found on Google for "Orlando Real Estate." I have worked very hard to get in the top results, and am happy to accept this award. I also have the top two spots when you search "Orlando Real Estate Blog."
David Welch Real Estate Optimist, Orlando Real Estate
I am the Real Estate Optimist, so let me start by saying the market will correct itself. Personally, I believe it would correct itself a lot faster if there was not quite so much intervention. From what I have seen, when there is a government program, there is a way to "game the system." It is much harder to play games with the market, because the market adapts. Government programs tend to be large static objects that do not adapt to the latest changes. Just read this article I saw on Yahoo this morning. http://finance.yahoo.com/news/Borrowers-exit-troubled-Obama-apf-887634101.html?x=0
From my own personal observations, I have seen people that should be ideal candidates for loan modifications denied. Unfortunately, I have to agree with Sumani Lanka, the attorney in the article, who finds that there is a lot of apparent incompetence. I am not sure if it is incompetence as much as a lack of procedure. There is a perception on my end of things that the banks have no actual procedures in place to deal with loan modifications or short sales. A process is quite simply a series of steps you must go through to achieve an outcome, yet most of the banks I have dealt with cannot tell me what steps have been completed or where they are in the process.
They simply seem to have a phase where they create a file, which is probably the most frustrating. This is the phase where they deny receiving information that is resubmitted repeatedly until they acknowledge receipt. Then it seems to float around in their black box for an undetermined amount of time - "in processing." The next phase is where they actually seem to assess the potential for the loan modification or short sale value. The conclusions they reach during this phase can also be quite frustrating, because they frequently make no business sense.
I know of one person, who was out of work for some time and unable to make their payments. Now he has a new job and is able to make his payments again, but the bank is pursuing a foreclosure. He is just asking them to restructure his loan so the amount that he is behind is put on the end of the loan so to speak. He wants to make his payments and stay in the home. This is the type of situation they should be working with. If they foreclose, they will likely loose at least $60,000. If they will work with the owner, all they lose is the time value of the payments he is asking to be pushed out. They can get paid everything a little late, or lose $60,000 now. They are telling him they would rather lose $60,000 now. You just cannot regulate dumb.
Just a quick update on June Orlando real estate sales, as Congress looks to extend the home buyer tax credit. So far 1,257 sales have closed this month, so we should finish the month above 2,500. The median price continues to hover around $115,000. The mix of bank owned, short sales and "normal" sales remains fairly consistent with 40.7%, 23.8, and 35.5% respectively. One change of note so far this month is the percentage of all cash deals. We have been averaging just about 50% cash deals, but so far in June only about 45% of the closed sales have been all cash. I will be following this to see if it is a trend or just a result of the tax credit.
Speaking of the tax credit, the extension that is being proposed in Congress right now will only impact the buyers that had contracts signed by April 30th. This is not a new credit, just an extension of the time period allowed for buyers to close existing contracts. This extension recognizes that buyers are having a difficult time closing, because of financing and short sale purchases. I imagine this will be approved.
I am following up on a SunTrust short sale today, and I have to say I am having flashbacks to dealing with Bank of America. It took a month of faxing the package to them before they would acknowledge receipt. Then it took another week of trying to get the third party authorizations approved, before they would even speak with us. First Service Title works with me on my short sales, and they have a fantastic team that really stays on top of where the short sale is in the "process". Once they finally acknowledged that they had the complete package, they reported that they had a 60 day set-up period. I of course ask, what is there to set up. We put the package together and sent it to you.
Over a month ago, we received word that they had alread been paid by the mortgage insurance company for their claim on the second mortgage. I contacted the mortgage insurance company, and they gave me an approval on the second in three days. Today I will be following up on my "escalation", because their 60 setup period expired Friday with nothing from them. Actually, when I called Friday they said once again that there was not a third party authorization on the file for me. If SunTrust will get this approved, they stand to have their first mortgage completely paid. They have already have received payment on the second, and they will get a big chunk toward their third. If they do not get this approved, and we lose our buyer or they go into foreclosure they home will only go down in value. The sellers have moved, and are no longer maintaining the property.
This one is a no-brainer SunTrust, so let's get this one approved.
Inventory remains very stable with 16,081 active listings, and distressed properties remain nearly half of all active listings with 2,150 bank owned and 5,588 short sales. That leave 8,342 "normal" listings or 51.9% of the total number. Pendings are also still high with 10,270. Distressed properties make up the bulk of pending sales with 2,056 REO and 6,556 short sales for a total of nearly 84% of all contracts. So far this month there have been 729 closed sales posted with a median sales price of $117,900. REO and short sales made up just over 63% of the closed sales with 294 and 167 respectively. Based on the sales so far, I am estimating we should still see 2,300 to 2,500 closed sales this month. That is a little lower than the last two months, but still very strong. It is probably also an indicator of how much the tax credit influenced sales in the prior two months.
The neighborhood stabilization program "NSP" is a $200 billion program set up by the federal government to target the areas hardest hit by foreclosures. The funds were apportioned by state, and here in Florida the counties had to present a plan on how the monies would be used. Orange County already has a down payment assistance program, and the funds are administered like the existing program. I have been working with someone that has been approved for the assistance, and we have made several offers contingent upon receiving these funds. A key point of this program is that the funds can only be used to purchase a foreclosed property.
One bank, Deutsche Bank said they would not even consider his offer, because of the NSP contingency. This one was quite frustrating, because the funds can only be used to purchase a foreclosed property, but the bank will not accept offers using these funds. What a "Catch-22". Speaking with another REO agent, I learned that other banks felt the same way. She said that the only properties that sold with NSP funds were the ones that they had a hard time selling. That usually means there is either something wrong with the property or it is priced too high. Either way, who is going to want a property like that, and how are you going to get it financed? It seems to me that at least Fannie and Freddie should give an NSP buyer a break, but we were shot down by them too. Another listing agent said they are seeing frustrated buyers making ridiculously high offers just to get a home under contract. The band sees a higher "net" to them, and accepts the too high offer. Of course, later the deal falls apart for appraisal issues. Who does that help?
It may have helped us, because we finally got an offer approved using the NSP funds on a Fannie Mae property. We saw it before, but it was under contract before we could even submit an offer. That deal fell apart (I don't really know why, but I am guessing financing), and we jumped on it. It was off the market for a while with that last contract, so I guess it appears to be hard to sell. It appears to have a newer roof, and the flooring and fixtures are all new too. The price seems right too. I will try to get this one finalized as quickly as possible.
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We have asked for pre-approval letters for prospective buyers as long as I have been in the business, and probably way before that. In the past any lender would do, but now some sellers are being more selective. Home sellers are starting to make acceptance of an offer contingent upon a pre-approval by their preffered lender. In some cases, they are specifying that the pre-approval must be from a direct lender not a mortgage broker. Some sellers are even giving incentives to go with the lender of their choice. The most recent situation I ran into involved a little bit of all of these.
An extremely well qualified couple that I have been working with, decided to make an offer on a home I just found for them. We knew when we left the house that it would not be around long. It was priced well, in a great neighborhood, and in spectacular condition. We went straight back to my office and wrote a very strong offer. They had a great deal of cash from the sale of their home up North, and had a strong pre-approval letter from Bank of America. We submitted the offer that day, and the primary issue we received in the counter offer was "dump Bank of America" or no deal. They actually offered an incentive to use their preferred lender, and my prospects jumped on it. As it happened, their preffered lender works with FBC Mortgage. If you read my blog, you know I recommend Jeffrey Sachs with FBC Mortgage. Their company is really making a terrific name for themselves here in the Orlando market.
Through the end of May, Baldwin Park is on track to post about as many sales as 2009. There were 190 sales last year, and five months into 2010 there have been 79 closed sales. While the number of sales looks to equal 2009, the prices are slightly higher this year. In 2009 the median sales price was $346,500 and the average price was $399,395. So far in 2010 the median sales price is up 4.5% to $362,000 and the average sales price is up 11.3% to $444,375 on five sales over a million dollars.
Distressed properties have had less of an impact in Baldwin Park making up only 26% of the active listings. Currently, there is only one REO and 19 short sales available in the neighborhood out of 77 homes. Overall in Orlando about 48% of the active inventory is either REO or a short sale. Pending sales reflect the popularity of the distressed properties with 69% of the 58 contracts. Again this compares favorably with the rest of Orlando where about 83% of the contracts are on distressed properties. The closed sales in the neighborhood also show fewer distressed properties than the rest of Orlando with 42% of the 79 closed sales. Overall around 65% of the closed sales this year have been either REO or short sales.
Without actually running the numbers the other day, I guessed that over half a billion dollars had flowed into Orlando real estate in the form of cash sales. I was off by over a hundred million dollars. January through May cash sales were worth just over $600 million according to sales posted in the MLS. At this pace we could see over $1.4 billion in cash sales in Orlando this year from more than 14,000 sales. In 2009 we had just over 10,000 sales worth over $1.1 billion. The sales price of the average cash sale is down about 10%, but the number of sales could be up 40% from last year if the pace continues.
I was out running this morning, and a couple of things happened that reminded me of the fable of the tortoise and the hare. First, another guy passed me about a mile into my run. He did not blow by me, but did pass me pretty easily. I looked at him as he went by, and he looked about 20 years younger than me and at least 50 pounds lighter. About 2.5 miles later, I came across a huge snapping turtle that had wandered close to the road. I got him headed back down to Lake Baldwin, and kept on running. Less than a quarter of a mile ahead was the guy who passed me - walking. As I ran past him, I said good morning and noticed he was probably only 10 years younger than me. I finished my run feeling pretty good that I finished stong and helped a stray turtle along the way.
As we continue to work through a tough real estate market, try to keep this story in mind. It is not going to be a sprint, but a pretty long run. It is hard, but it feels so good when you are done. You will be stronger if you persevere. The other thing to keep in mind is that things look very differently depending on whether you are being passed or are passing someone else. It's also ok to stop and help someone else who may be in a worse place than you are.
These numbers are preliminary, but I would not expect them to change too much in the next few days. First, sales were still very strong last month with around 3,600 new contracts written on pending and closed sales. There have been 2,474 sales posted so far, but that will likely go up by a another 200 or so. The median price of those sales was $115,000 which is a slight increase from the last few months of $110,000. Of the closed sales 1,225 were cash deals continuing the trend of about half of all sales coming in as cash transactions. I will have to run the numbers to see just how much cash has flowed into Orlando real estate so far this year. I am going to guess it may be as much as half a billion dollars. Just over 64% of the closed sales were distressed properties which again is a bit lower than the 67% we were seeing a few months ago.
Active listings continue to hang around the 16,000 mark with 15,,986 available for sale. Bank owned and short sale properties continue to make up almost half the homes for sale with 48.4% of the total. Only about 12.8% are REO's with 2,048 and more than a third are short sales with 5,691. Pending contracts are down a little from their high of over 11,000 with 10,467. This is the segment reflecting the biggest impact of distressed properties with 2,051 REO's and 6,630 short sales for a total of 82.9% of all contracts pending. At the current sales pace there is about a 6.5 month inventory of homes available for sale. There is another 4.2 month supply of pending sales, because of the continued backlog of short sales. Only 8.7% or 579 of the pending short sales closed in May. The banks seem to be making faster decisions, but the percentage of closed short sales is not improving. I am looking forward to a strong Summer selling season.
How does the old nursery rhyme go? "April tax credits bring May closings." All the experts have been expressing their concerns that real estate sales will fall off now that the tax credit has expired. For once I do not have any statistics only my own experiences with buyers. I have been quite busy with first time home buyers, repeat home buyers and investors. First, investors do not qualify for any credit, but they probably account for almost half of our market here in Orlando. I am making that estimate based upon the percentage of cash sales. In fact, just over 50% of our closed sales this year have been cash transactions. Many of the repeat buyers I have been working with did not even know they qualified for a tax credit until I told them.
The first time home buyers definitely had more interest in the tax credit, but eveyone I have worked with has said that was not the key reason they were buying now. I am still working with first time buyers who started looking during the credit and are still actively looking for a home. In the weeks since the deadline has past, I have continued to receive calls and e-mails from buyers looking to purchase their first home. Probably the biggest swing we will see between April and May will be in the number of contracts written. There were around 4,700 contracts written in April that are either still pending or have closed. In May there are only about 3,600, but I don't see that as some big crash about to happen. In March there were about 3,700 contracts written that have either already closed or are still pending. My guess is that many of those extra 1,100 contract will not close at all. Many buyers rushed into contracts on short sales as a safety net in case they could not get another home under contract in time for the tax credit.
It will be difficult to quantify the actual impact of the tax credits, but I think they had some limited impact here in Orlando. Lower prices and record low interest rates play a far greater role in the recovery of our sales. So far this year sales have been very strong with around 1,800 closed in January, 2,000 in February, 2,700 in both March and April. So far there have been about 2,300 posted sales for May. Friday was the last day to close in May, so I expect we will see a few hundred more posted over the next few days. June is looking very good for me with five closings scheduled right now, and another one coming. These six sales are evenly split between buyers and sellers. They are also evenly split between investors, first time buyers and repeat buyers. Only one is bank owned, two are short sales and three are "normal" sales, so they are also evenly split between distressed and not distressed. Only two qualify for the tax credit.
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